Update On Solaris; National Bank on Solaris and Royal Gold Transaction on Warintza Project

(Adds National Bank commentary from eight paragraph, and share price update)

Solaris Resources (SLS.TO, SLSR) on Wednesday said it signed a US$200 million financing arrangement with Royal Gold subsidiary RGLD Gold to advance the Warintza copper-gold project in Ecuador.

The funding package is composed of a gold stream and net smelter return royalty and the US$200 million cash consideration will be paid in three installments.

The first US$100 million tranche will be paid upon deal closing. The second US$50 million tranche will be made available following the publication of the pre-feasibility study and receipt of the environmental impact assessment technical approval. The third US$50 million tranche will be made available on the first anniversary of deal closing and completion of necessary filings.

Royal Gold will receive gold deliveries equivalent to 20 ounces per 1 million pounds of copper produced from the RGLD Gold area of interest, expected to represent only a small percentage of the gold over the life of mine.

For each ounce of gold delivered, Royal Gold will pay the equivalent of 20% of the spot price until 90,000 ounces have been delivered and 60% of spot price thereafter.

Royal Gold will receive a 0.3% net smelter return royalty on all metal production from the RGLD Gold Expanded AOI. The royalty will increase annually by 0.0375%, up to a maximum of 0.6%, until the first delivery of gold under the Stream or eight years following the closing date, whichever comes earlier.

The package provides the funds required to repay the company's senior debt facility with Orion Mine Finance Management and is expected to provide liquidity to fund activities through to a final investment decision.

Solaris maintained its Outperform rating and C$10.50 price target at National Bank of Canada following the news.

The rating was based on Warintza's large-scale/near-surface resource, attractive project economics and management's track record of generating shareholder value, the bank said.

National Bank said Solaris is currently trading at a P/NAV of 0.35x vs. developer/single-asset peers at 0.53x.

The bank said the transaction provides improved flexibility to Solaris, adding that it will be able to eliminate the existing offtake agreement on the concentrate and stream agreement as part of the transaction can be repurchased without penalty under a change of control.

Solaris' share price at last look Wednesday had gained 3.5% to $5.61 on the TSX.

Price: 5.60, Change: +0.18, Percent Change: +3.32